As a general rule, NJ executives have a greater duty to abide by the law than to be loyal to the company. This is because the law imposes certain obligations and responsibilities on executives that may override, when in conflict, with their loyalty to the company.
Corporate Executive Whistleblowers May Experience Conflicts Between Loyalty to Company and Upholding the Law
Executives in a company have broad sweeping responsibilities which at times may lead to inner conflicts between a duty to uphold the law and a misconceived duty of blind loyalty to the company. In New Jersey, whistleblowers are protected by the Conscientious Employee Protection Act (CEPA), which prohibits employers from retaliating against employees of all levels who act in good faith and in the public interest. An executive who discloses, or threatens to disclose to a superior or to a public body an activity, policy or practice of the employer, that he reasonably believes violates the law is engaged in protected whistleblowing activity. It is also protected activity for executive who objects to, or refuses to participate in any activity, policy or practice of the company which the employee reasonably believes violates the law. To read more about the “reasonable” standard, click here.
If you are a whistleblower who is experiencing retaliation, you should contact this office immediately for a free consultation. I have represented executive employees who suffered retaliatory adverse actions as result of their whistleblowing and was successful in recovering financial compensation for their lost wages, both past lost wages and projected lost future earnings, reputational harm, and emotional distress damages. If you think you are being pushed out of your job because of your protected activity, you should contact this office immediately for a free consultation. CEPA protection extends to NJ employees who live and work out-of-state.
Other whistleblower laws are:
The NJ False Claims Act and Federal False Claims Act. You may read more about these Acts and Qui Tam here.
The Whistleblower Protection Act (WPA) (5 U.S.C. § 2302(b)(8)) protects Federal employees or applicants for Federal employment from retaliation for making protected disclosures. The WPA also provides penalties for supervisors who retaliate against Whistleblowers.
Dodd-Frank Act. You may read more about Dodd-Frank in US Supreme Court News for Those Who Report Securities Law Violations: Narrow Interpretation of Whistleblower in Some Instances under Dodd-Frank Act.
Additionally, the SEC Whistleblower Reform Act of 2023, introduced in the Senate on March 15, 2-23, (not yet passed) is a bill that expands and revises whistleblower protections applicable to individuals who provide information to the Securities and Exchange Commission (SEC) relating to a violation of securities laws. Under current law, an employer is prohibited from retaliating against these whistleblowers. This bill expands and revises whistleblower protections applicable to individuals who provide information to the Securities and Exchange Commission (SEC) relating to a violation of securities laws. This bill deems as unenforceable a pre-dispute arbitration agreement regarding a whistleblower action.
Duty of Loyalty Does Not Encompass Illegal Activities
Executives may feel they are abandoning their post when they do not have a blind allegiance to corporate policy, even if it violates the law. Concerns may arise they are violating their contract as to the implied or express duty of loyalty. The duty of loyalty is implied by virtue of the common law. It holds that an employee must act in an honest, faithful and loyal manner and must discharge all of his or her employment duties for the sole benefit of the employer. However, even the duty of loyalty has its legal limits and does not encompass furthering illegal activities of the employer by affirmative acts or acts of omission. Some of the obligations and responsibilities of executive employees are:
Fiduciary Duty: Executives owe a fiduciary duty to the employer company and its shareholders, which means they must act in good faith, with due care, and in the best interests of the company. They must also avoid conflicts of interest, self-dealing, and misuse of corporate assets or information.
Reporting Accountability and Material Transparency: Some executives have responsibility to report and disclose any material information or events that affect the company's performance, financial condition, or legal compliance to the relevant authorities, such as the Securities and Exchange Commission (SEC), the Internal Revenue Service (IRS), or the State Ethics Commission. They must also ensure that the company's records, books, and accounts are accurate, complete, and timely.
Laws and Regulations as to Corporate Governance: All Executives must comply with the that govern the formation, operation, and dissolution of the company, such as the New Jersey Revised Statutes Title 14A - Corporations, General. They must also follow the by-laws, policies, and procedures of the company, as well as any applicable codes of ethics or conduct.
No Practice of Deception or Misrepresentation: Executives must not engage in any activity, policy or practice of deception or misrepresentation which the employee reasonably believes may defraud any shareholder, investor, client, patient, customer, employee, former employee, retiree or pensioner of the employer or any governmental entity.
If executives violate any of these obligations or responsibilities, they may face legal consequences, such as civil liability, administrative sanctions, professional discipline, and in certain instances, criminal prosecution. They may also damage their reputation, credibility, and trustworthiness in the eyes of their superiors, peers, and shareholders. Executives have a greater duty to abide by the law than to be loyal to the company.
However, this does not mean that executives have no loyalty to the company at all. Loyalty is an important virtue that can foster teamwork, commitment, and motivation among executives and other employees. Loyalty can also enhance the company's culture, performance, and competitiveness. Therefore, executives should balance their loyalty to the company with their duty to abide by the law. No employee should ever blindly follow or defend the employer's actions or decisions if they are illegal, or may defraud any shareholder, investor, client, customer, employee, former employee, retiree or pensioner of the employer or any governmental entity.
In conclusion, NJ executives have a greater duty to abide by the law than to be loyal to the company. However, they should also maintain a reasonable degree of loyalty to the company as long as it does not compromise their legal or ethical obligations or responsibilities.
If You Complained about What You Reasonably Believed to Be Your Company's Illegal Practices and Your Employer Retaliated
Do not sit on your rights, or you may lose the right to file your claim. If you have been subjected to retaliation for complaining about, objecting to, refusing to participate in, or reporting what you believe is your employer's illegal or improper conduct, you should contact this law firm as soon as possible. I am successful in bringing whistleblower lawsuits against governmental entities and private employers and recovering money for whistleblower workers.
If you resign, you may lose right to prevail in a lawsuit. In many instances of whistleblower discrimination and retaliation, if you resign, you may lose right to prevail in a lawsuit unless you first take certain legally required measures to preserve your job while you are still employed.
If you are thinking of resigning, or think you will be fired, or have been fired, you should contact this office immediately for a free consultation to discuss your options in the safest way for you. I have successfully represented executives, managers, healthcare workers, truck drivers in whistleblower lawsuits and obtained multiple-six figure moneys for them. If you believe you are being targeted in retaliation for whistleblowing, you should contact this office immediately for a free consultation.
If you are being subjected to such unlawful workplace retaliation, contact Hope A. Lang, Attorney at Law today for a free consultation. I accept whistleblower and discrimination cases from all over New Jersey and have locations in Southern, Central and Northern NJ to meet with clients.
Hope A. Lang, Attorney at Law represents workers throughout the entire state, including Hackensack, Jersey City, Newark, Irvington, Orange, East Orange, Trenton, Paterson, Montclair, Elizabeth, North Brunswick, Cherry Hill, Vineland, Union, Plainfield, Hamilton Township, Lakewood, Edison, Parsippany-Troy Hills, Franklin, Lakewood, and every NJ County, including Bergen, Hudson, Middlesex, Essex, Monmouth, Somerset, Ocean, Union, Camden, Passaic, Morris, Gloucester, Atlantic, Burlington, Camden Counties.